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Life is unpredictable. Unfortunately, medical issues can occur without any prior warning causing a medical hardship. Let’s say that someone has a medical deductible of 5000 dollars. But they face a medical hardship and the hospital charges them 4300 dollars. As the bill does not reach the deductible, they cannot afford to pay. The hospital will then try to collect the money by billing them. If the person still does not pay, the hospital may turn the bill over to a collection agency.

From there, the collection agency begins pursuing its medical debt. This can be a stressful process for the debtor. They will most likely receive countless calls, texts, and emails from these collection agencies. What can you do if you find yourself in a situation like the one above? In this article, find out what differentiates medical debt from normal consumer debt, what medical debt in collections means, and finally 3 ways you can try to settle your medical debt by negotiating with collection agencies.

Related Reading: Is There Medical Debt Forgiveness for the Disabled?

We built the below Medical Debt Negotiation and Options calculator to help you know your options and the costs of those options.

How Medical Debt is Different from Other Forms of Debt

According to CNBC, 137 million Americans are in medical debt. Medical debt is a debt due to the failure or inability to pay for health-related expenses. This is often the result of rising costs of healthcare in America. But what is especially unique about medical debt is that it can be incurred outside of the patient’s control or awareness.

In terms of the process of acquiring medical debt, it begins with an unpaid medical bill. When it is not paid, it becomes “past-due”. From there, hospitals can, according to the Sycamore Institute, “turn an unpaid bill over to in-house or third-party debt collectors or sell it to a debt buyer”. Your bill can only be turned over after 31 days elapse. This period is meant to allow you, as the debtor, to pay off your debt and prevent damage to your credit score. One thing to note is that while some hospitals might report debt right after the 31-day period has passed, some will continue to try to collect the debt on their own for up to 180 days after the bill was instated. 

What happens after your debt is turned over to a collection agency is important. If the debt remains unpaid, the debtor is at risk of being sued or losing their personal property. Additionally, unpaid medical debt negatively affects your credit score. Therefore dealing with your debt if it reaches a collection agency is crucial.

Medical Debt with Collections Agencies

What does having medical debt from a collections agency mean? When a hospital turns over medical debt to a collections agency, it is that agency that reports the debt. Agencies have the right to report the debt to credit bureaus immediately upon receiving them.

From when the collections agency receives the debt report, it is required that they wait a 180 day period before adding your medical debt to your credit history. After this period of time, collections agencies have the right to list your debt in public records or file it onto your credit report. As describes, when the transfer occurs, the collection agency receives “a new tradeline on your credit report that’s under the [their] control”. The impact on your credit score is extremely damaging and, until the medical bill is paid, remains ‘unpaid’ for 7 years. Unfortunately, even if you are still making a payment towards your debt, collection agencies can still report it.

Negotiating Medical Bills in Collections

When medical bills reach collection agencies, it may seem like there is nothing you can do. However, there are still many options available to you in terms of negotiating with agencies.

Negotiating for Less Than is Owed

If you have ever settled consumer debt, settling medical debt is no different. One thing to keep in mind is the possibility that you may have been overcharged for your medical bill. In fact, according to,  8 out of 10 medical bills contain errors or fraudulent charges. So in preparing to negotiate, make sure to be familiar with your medical bill — know exactly what it says and look for errors.

The first step is to get into contact with your collection agency. It is not uncommon that, through negotiating, your collection agency agrees to settle for a lower debt. While this is still an option, the chances of a collection agency settling for a lower collection are low. This is simply because they have little to no incentive to do so. Nonetheless, it is still worth the try.

Negotiate Disputed Debts

You might consider disputing your debt if, for instance, your insurance was supposed to pay for it and you were not aware of the debt until it was transferred to collections. If this applies to you, you have 30 days to dispute the medical debt. During this time, the collection agency does not have the right to any debt collection. There is a catch as reporting the debt to credit bureaus does not count as debt collection.  If your disputed debt is accepted, you can negotiate for it to be removed from your credit report. For more information on negotiated disputed debts, click here.

Negotiate for a Lump-Sum or Structured Settlement

Settling medical debt is a viable option that you can consider. A lump sum is a one-time fixed payment that you can offer to collections. This lump sum should be less than the amount you are currently being charged. Collections agencies have some incentive to accept lump sums as it is at least a guarantee that they will receive a payment rather than none at all.

Similarly, a structured settlement is a payment plan that rolls out over a year. The key here is to negotiate to pay an amount lower than what you are currently being charged. The first step you can take is to spend time creating a solid plan of payment that you can present to your collection agency. 

In Conclusion

Life can throw a curveball at you in the form of medical expenses that you are unable to pay. When these bills are transferred to collections agencies, options exist through negotiating to eliminate or at least reduce the impact of your debt. Settling medical debt can be something to consider if your medical bills are with a collection agency. Similarly, if you are facing medical hardship, you should look into what you can do about your debt in that situation.

Post Author: Delali

Delali is a writer for Ascend where she shares in depth personal finance articles on such topics as financial hardship, student loan hardship, and ways to reduce your expenses.

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